Full-choice Medical Insurance Fading Fast

Changes Affect Hospital Services

Medical Insurance Changes Direction

Hospitals Affected

September 02, 1992|By ROBERT S. CAPERS; Courant Staff Writer

For decades, health insurance meant infinite choice about what doctor to see and what treatment to receive. It also meant there would be no paperwork and no question about whether the bill would be paid.

That option isn't quite extinct, but it's certainly endangered.

After several years of sharing the field with health maintenance organizations (HMOs) and other plans that seek to reduce costs by "managing" health-care choices, the traditional system is disappearing as an option for people who receive insurance through their employers.

The continuing changes in the health-insurance business also are affecting hospitals, which now must compete with each other, in many cases, to offer wholesale package services to employers and insurance providers.

The latest people to lose the fullchoice option in the Hartford area are about 8,200 employees of the Hartford Insurance Group.

Next year, the company will abandon the traditional plan known as indemnity insurance.

Other major employers in the Hartford area that have done this are Newington Children's Hospital and Blue Cross & Blue Shield. Aetna and the Travelers Cos. still offer what they call indemnity policies, but all have elements of managed care in them and none offers the freedom of choice that was available in the past.

Basically, corporate benefits managers say there is no way to limit medical spending if employees subscribe to indemnity plans, in which an insurance company indemnifies or guarantees that, after a deductible is paid, it will cover most of a subscriber's medical expenses.

"We're trying to move toward managed care, which is difficult to do in an indemnity plan," said Frank Dorian, assistant director of employee benefits at The Hartford.

Managed care seeks to control costs by taking away some of the decision-making authority of the patient and the doctor. Among

other restrictions, managed-care plans may require that some procedures be approved by a second doctor or that payment be prohibited for procedures that are not considered medically useful.

Managed care is not always successful; in some cases, many employers say, their health expenses have continued to rise after implementation of the new programs. However, companies still believe these programs will be needed to control spending, in conjunction with other measures, such as improved education to make consumers more responsible.

More than 2,600 of The Hartford's employees in the region now subscribe to the indemnity plan, which is being replaced with a preferred provider organization, or PPO.

In the PPO, 90 percent of medical expenses of employees will be paid if the services are provided by a doctor in the PPO network -- a group of doctors who have agreed to provide service at a discount. Employees will receive 70 percent reimbursement if medical care is provided by doctors not in the network.

Dorian said there was little reaction when the company announced it would stop offering the indemnity plan.

However, an employee at the company said many employees are unhappy about the change but are afraid to say anything because they fear the company might take action against them.

In addition, she said, it was clear that a final decision had been made and that the company would not reverse itself.

The employee, who asked not to be named, said she is especially upset because she has been a patient of physicians at St. Francis Hospital and Medical Center, but no doctors from St. Francis are in the PPO network.

As a result, she must choose between seeing a new doctor at Hartford Hospital or continuing to see her own doctor and paying more of the cost herself.

"I'm definitely not happy," she said. "You have to pay more or you have to go elsewhere."

Dorian said two or three employees said they were unhappy with the change because they would prefer to receive their medical care at a Catholic hospital.

Dorian said The Hartford considered proposals from several PPOs, including one dominated by St. Francis physicians, but chose Medspan, which is owned and operated by the holding company that controls Hartford Hospital.

Medspan has a network of about 1,500 physicians and 10 hospitals covering nearly the entire state, said Kevin Kelly, Medspan president. In addition to Hartford Hospital, they include New Britain General, Manchester Memorial, Stamford Hospital and Charlotte Hungerford in Torrington, he said.

Officials at St. Francis do not believe they will be hurt financially by the loss of the patients, said Pete Mobilia, hospital spokesman.

However, Donald C. Pogue, a member of the state Commission on Hospitals and Health Care, said competition between hospitals is likely to become more intense.

"It's an issue for St. Francis," Pogue said. "The future of hospitals is very much shaped by the affiliations that doctors have with them, and they have to have a flow of cases. If you don't keep up your volume, then there is an issue about viability."